Employers' and public liability insurance: The facts

Employers' and public liability insurance protect the insured against the liabilities imposed by lawsuits or similar claims. These policies are designed to offer specific protection against third party insurance claims. Normally, intentional or contractual liabilities are not protected. But court costs to defend a claim and all sums for which the insured is liable are covered.

What cover is provided?

In addition to covering court cost and having a duty to indemnify by covering all sums that the insured is liable for, employers’ and public liability insurance can settle the claim. This is possible only if under other circumstances a reasonable insurer would have settled the claim.

Employers’ liability insurance

This type of liability insurance covers the insurer if an employee is injured or taken ill as a result of their employment. In the UK employers' liability insurance is mandatory for all limited companies, but sole traders don’t need to be covered. Companies that are exempt from this type of insurance often purchase it for the financial security it provides.

Public liability insurance

If your business is open to the public, if customers come to your premises, or if you visit theirs, then this type of insurance should be considered. As with other forms of liability insurance, the legal fees and expenses are covered, but in addition, any hospital treatment or ambulance costs that the NHS could claim from you would be covered. In some instances you customers will insist that you have public liability insurance before they engage your services.

Public liability insurance premiums are calculated on the type of business and an estimate of the business’s turnover. A company’s level of activity would also be considered. For example, a public liability insurance premium for a hotel would have to estimate the amount of guests the hotel will have over the period of the cover.

Final word

Employers’ and public liability insurance premiums can be bought individually or as a combined policy. These premiums cover both traditional and emerging legal liability risks and protect the business from the unexpected. Other commercial provisions can be added to you policy, like directors and officer’s liability cover, so you should check with a broker before accepting a policy.